Avista needs more detail on Colstrip, carbon costs in its energy plan, regulators say

May 09--Avista Corp. and Washington's other investor-owned utilities should reconsider their reliance on coal-fired electricity, state regulators say.

The Utilities and Transportation Commission approved Avista's 20-year resource plan for meeting its customers long-term energy needs on Monday. But the UTC also directed Avista to provide more detail on the costs associated with the Colstrip generating station's operations.

The Spokane-based utility is one of six owners of the coal-fired plant in Montana, which produces about 9 percent of Avista's electricity.

The UTC directed Avista and two other owners -- Puget Sound Energy and Puget Power -- to answer additional questions about Colstrip's financial viability, including the cost to ratepayers for capital investment needs, environmental cleanup and state and federal carbon programs.

"It is imperative that utility planners recognize the risks and uncertainties associated with greenhouse gas emissions and identify a reasonable, cost-effective approach to addressing them," the three-member commission wrote in its decision.

Colstrip ranks among the West's top greenhouse gas emitters, producing about 16 million metric tons of carbon dioxide and other climate-warming gases each year, according to the U.S. Environmental Protection Agency.

Burning coal adds more carbon dioxide to the atmosphere than other fossil fuels. For years, the Sierra Club and other environmental groups have called for Colstrip's closure.

Doug Howell of the Sierra Club's Beyond Coal campaign, said he was pleased to see carbon costs targeted in the resource plan, but had hoped for a Colstrip closing date.

"We need a date certain for retirement," Howell wrote in an email, saying the plant's continued operation exposes ratepayers to financial risk.

Avista bought a 15 percent stake in Colstrip's units 3 and 4 in the 1980s. Utility officials say the coal plant provides customers with reliable and affordable energy.

Avista recently agreed to a new depreciation schedule for units 3 and 4. It assumes the remaining useful life of the units is through the end of 2027, shaving 10 years off the previous schedule.

Although Avista agreed to accelerate Colstrip's depreciation, "we have not committed to closure of the units," said Casey Fielder, a company spokeswoman.

The depreciation schedule was part of a proposed settlement with the UTC outlining how Avista will operate after it's $5.3 billion sale to Toronto-based Hydro One The deal is expected to close later this year.

Avista and other utilities are required to update their 20-year resource plans every two years, indicating how they will meet future electric load growth. Avista's current plan already addresses some issues related to carbon costs, Fielder said.

Work will begin this summer on the next plan, which will provide additional information requested by the UTC, she said.

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